1. Gaurav Kumar and Ms. Kiran Vihani, the petitioners herein vide
instant petition under Section 482 Cr.P.C. have prayed for the quashing of
complaint case No.133/1/2005 pending in the court of Metropolitan
Magistrate, New Delhi and consequent summoning order dated
25.07.2005 qua them.

Crl.M.C.3314/2010 Page 1 of 8

2. Briefly stated, the facts relevant for the disposal of this petition are
that the respondent Surinder Patwa, Proprietor of M/s. Madan Lal
Surender Kumar filed above referred complaint No.133/1/2005 under
Section 138 read with 141 of the Negotiable Instruments Act against M/s.
Fisba Enterprises Pvt. Ltd. (hereinafter referred to as "Company") and its
four directors, including the petitioners.

3. It is alleged in the complaint that the complainant had supplied yarn
products to the accused company against three post dated cheques being
cheque No.217429 dated 06.07.2004 which was revalidated on
18.03.2005, for Rs. 3,25,000/-, cheque No.217432 dated 18.03.2005 for
Rs. 1,09,000/- and cheque No.217435 for Rs.1,09,000/-, each drawn on
State Bank of Patiala, Azadpur Sabzi Mandi, 27 Transport Centre, New
Delhi - 33. Shitij Kumar, Director of the company is stated to be the
signatory of those cheques. These cheques, when presented for
encashment through the bankers of the complainant, were returned
unpaid with the remarks "Insufficient Funds". The complainant, therefore,
issued a notice of demand under Section 138 N.I. Act to the company and
its directors, including the petitioners, but they failed to pay the cheque
amount within the requisite period despite service of notice.
Consequently, the complainant was constrained to file the complaint
under Section 138 read with 141 N.I. Act against the company and its
directors, including the petitioners.

Crl.M.C.3314/2010 Page 2 of 8

4. The allegations to fix the vicarious liability of the petitioners with the
aid of Section 141 N.I. Act are in para 21 of the complaint, which is
reproduced thus:

"21. That the accused No.1 is a company incorporated under the
Companies Act 1956. Accused No.1 company has issued the
abovementioned cheques for the discharge of its liability in part.
Accused No.2,3,4 & 5 are directors of the accused No.1 company and
were/are in charge of the affairs of the company and are responsible
to the company for the conduct of the business of the company. The
offence has been committed with the consent and connivance of the
accused No.2,3,4 & 5 as well as accused No.1 are guilty of the offence
envisaged u/s 138 of the Negotiable Instrument Act and are liable to
be proceeded against and punished accordingly."

5. On the basis of the aforesaid allegations in the complaint and the
affidavit evidence of the complainant reiterating the allegations, the
learned Magistrate passed the impugned order of summoning the
petitioners.

7. Main contention on behalf of the petitioners is that apart from a bald
allegation in the complaint with regard to the petitioners being directors
of the accused company and in-charge of day to day affairs of the
company and being responsible to the company for the conduct of the
business, there is no allegation in the complaint which could, prima facie,
show as to how the petitioners were in charge and responsible for day to
Crl.M.C.3314/2010 Page 3 of 8
day affairs of the company and what were the acts and functions which
were being discharged by them so as to bring them within the ambit of
law under Section 141 of the Negotiable Instruments Act. Learned
counsel submitted that in absence of any specific allegations in this
regard, the order of summoning is not sustainable in law.

8. Learned counsel for the respondent, on the contrary, has submitted
that the complainant has made a specific allegation against the
petitioners that they were directors of the accused company and were in-
charge of day to day affairs and conduct of the business of the company,
which fact is also supported by the affidavit evidence filed by the
respondent in the court. Therefore, the initial onus for making a prima
facie case against the petitioners has been discharged by the respondent.
Learned counsel contended that now the onus is on the petitioners to
adduce the evidence during the course of trial to establish that they were
not in-charge and responsible for the conduct of the business of the
company.

9. I have considered the rival contentions and gone through the
material on record.

10. The law relating to vicarious liability of a director under Section 141
of N.I. Act for the offence under Section 138 N.I. Act committed by a
company is well settled. The question came up for consideration before a
Crl.M.C.3314/2010 Page 4 of 8
three Judge Bench of Supreme Court in SMS Pharmaceuticals Ltd. Vs.
Neeta Bhalla, (2005) 8 SCC 89 wherein upon consideration of a
number of decisions of the Apex Court, Supreme Court opined thus:

"10. While analysing Section 141 of the Act, it will be seen that
it operates in cases where an offence under Section 138 is committed
by a company. The key words which occur in the section are "every
person". These are general words and take every person connected
with a company within their sweep. Therefore, these words have been
rightly qualified by use of the words:

"Who, at the time the offence was committed, was in charge of,
and was responsible to the company for the conduct of the business
of the company, as well as the company, shall be deemed to be guilty
of the offence, etc."

What is required is that the persons who are sought to be made
criminally liable under Section 141 should be, at the time the offence
was committed, in charge of and responsible to the company for the
conduct of the business of the company. Every person connected with
the company shall not fall within the ambit of the provision. It is only
those persons who were in charge of and responsible for the conduct
of business of the company at the time of commission of an offence,
who will be liable for criminal action. It follows from this that if a
director of a company who was not in charge of and was not
responsible for the conduct of the business of the company at the
relevant time, will not be liable under the provision. The liability
arises from being in charge of and responsible for the conduct of
business of the company at the relevant time when the offence was
committed and not on the basis of merely holding a designation or
office in a company. Conversely, a person not holding any office or
designation in a company may be liable if he satisfies the main
requirement of being in charge of and responsible for the conduct of
business of a company at the relevant time. Liability depends on the
role one plays in the affairs of a company and not on designation or
status. If being a director or manager or secretary was enough to cast
criminal liability, the section would have said so. Instead of "every
person" the section would have said "every director, manager or
secretary in a company is liable"..., etc. The legislature is aware that
it is a case of criminal liability which means serious consequences so
far as the person sought to be made liable is concerned. Therefore,
only persons who can be said to be connected with the commission of
a crime at the relevant time have been subjected to action."

"8. To launch a prosecution, therefore, against the alleged
Directors there must be a specific allegation in the complaint as
to the part played by them in the transaction. There should be
clear and unambiguous allegation as to how the Directors are
in-charge and responsible for the conduct of the business of the
company. The description should be clear. It is true that precise
words from the provisions of the Act need not be reproduced
and the court can always come to a conclusion in facts of each
case. But still, in the absence of any averment or specific
evidence the net result would be that complaint would not be
entertainable."

12. From the above judgments, it is apparent that in order to rope in a
director of a company for the offence under Section 138 N.I. Act with the
aid of Section 141 of N.I. Act, the complainant is not only required to
make a clear allegation that the person concerned was the director of the
company, but he is also required to make specific allegation of the facts
indicating as to how and in what manner the said director was in-charge
and responsible for conduct of the business of the company.

13. On reading of the complaint filed by the respondent, it would be
seen that admittedly, the petitioners are not the signatories to the
cheques in question. In order to rope in the petitioners to be vicariously
liable for the offence under Section 138 N.I. Act committed by the
Crl.M.C.3314/2010 Page 6 of 8
company, in the name of allegations, respondent/complainant has simply
reproduced the language of Section 141 N.I. Act in the complaint. There
is no allegation in the complaint to show as to how and in what manner
the petitioner directors were in-charge and responsible for the day to day
affairs and business of the company. In absence of specific allegation in
this regard, in my considered view, the requirement of Section 141 N.I.
Act to hold the petitioners vicariously liable for the offence committed by
the company is not fulfilled. Even in the affidavit evidence given by the
respondent before the Magistrate, there is no mention as to how and in
what manner the petitioner directors were in-charge of or were
responsible to the company for its day to day affairs and conduct of
business. Thus, in my view, the petitioners cannot be held vicariously
liable for the purported offence under Section 138 N.I. Act committed by
the company.

14. In view of the above, I am of the considered view that the impugned
order of learned Magistrate dated 25.07.2005 summoning the petitioners
for the offence under Section 138 N.I. Act committed by the company with
the aid of Section 141 N.I. Act is not sustainable in law as there is neither
a specific allegation nor prima facie evidence on record to show that the
petitioners were in-charge and responsible for the conduct of the business
and the day to day affairs of M/s Fisba Enterprises Pvt. Ltd.
Crl.M.C.3314/2010 Page 7 of 8

15. Result of above discussion is that impugned summoning order dated
25.07.2005 qua the petitioners Gaurav Kumar and Ms. Kiran Vihani is
quashed.

16. Petition as well as the application stand disposed of accordingly.